Macfarlane Group has conditionally agreed to acquire the trade and selected assets of packaging distributor Greenwood Stock Boxes in a £16.75m deal.

Macfarlane will also acquire 100% of the share capital of Greenwood’s sister company Nottingham Recycling (Greenwoods).

The board of the company also announced a proposed share placing to raise nearly £8m before expenses.

Based in Nottingham and Melton Mowbray, Greenwoods focuses on distributing corrugate packaging to the clothing retail sector.

“We see significant benefits in Greenwoods becoming part of Macfarlane Group and look forward to their continued success.”

The company also operates a corrugate manufacturing site, and a collection and baling service for waste corrugate.

The acquisition is expected to strengthen Macfarlane’s packaging distribution business in the UK’s protective packaging market by providing new customers in the clothing retail sector.

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Macfarlane Group chief executive Peter Atkinson said: “This acquisition is another major step forward in our growth strategy.

“Greenwoods is a long-established, high-quality business, which has successfully developed into attractive markets with good growth potential.

“We see significant benefits in Greenwoods becoming part of Macfarlane Group and look forward to their continued success.”

As part of the transaction, Macfarlane will issue more than nine million new ordinary shares of 25p each amounting to £6m, £7.5m in cash and cash earn out of £3.25m after a period of 12 months as consideration.

Macfarlane will use the funds procured through share placing to partly fund the acquisition.